MUMBAI/NEW DELHI: Jubilant FoodWorks, the country’s largest quick service chain and operator of Domino’s Pizza and Dunkin’ Donuts outlets, posted a jump in same-store sales for the second straight quarter in the April-June period with 4.6% growth year on year. While it indicates a recovery in its business from a year ago when same-store sale fell 2.4%, the growth rate was less than the January-March quarter’s gain of 6.6%.

Jubilant FoodWorks on Thursday reported 6% year-on-year increase in its net profit for the quarter at Rs 29.5 crore while its sales rose 20% at Rs 570.7 crore. The numbers fell short of Street expectations and the company’s stock fell 2.78% from its previous close to end atRs 1,768.6 on the BSE on Thursday.

The company expressed satisfaction with its performance. "We are witnessing good uptake from virgin cities where we are first to introduce the pizza concept and where we enjoy certain cachet being an international brand that talks Indian," said Ajay Kaul, chief executive officer at Jubilant FoodWorks.

During January-March quarter, Jubilant had broken its streak of six quarters of either stagnant or declining growth. And it has outperformed rivals Yum! Restaurants, which runs Pizza Hut, and Westlife Development, holder of the McDonald’s franchise in parts of the country, which have been reporting decline in samestore sales every quarter for about two years now, indicating a continued slowdown in the country's fast-food market despite fighting back with cheaper menu items.

Delivery versus dine-in

Analysts said growth of Domino’s, which runs 911 restaurants across 208 cities, is synonymous with home delivery and indicates that consumers are spending more on fast food at home while cutting back on the frequency of eating out amid a proliferation of restaurants in the segment.

"Within the delivery format, there are limited choices for consumers versus eating out, where a consumer gets more options to choose from. And a delivery customer tends to be more loyal. Pizza companies remain the preferred delivery options and Dominos continues to dominate this segment, benefiting from its under 30 minute delivery promise," said a JP Morgan report.

Several other QSR formats, including McDonalds, and KFC are stepping up their focus on the delivery format and the growing prominence of online food aggregators such as FoodPanda, TastyKhana and TinyOwl could widen the base of delivery options for consumers in coming years.

Burgers or bhature?

Yum! Restaurants, which runs 431 Pizza Hut stores, 395 KFC stores and seven Taco Bell stores in the country, had posted an 11% drop in samestore sales in the June quarter, while Westlife Development reported a 4.9% decline.

"The demand conditions in the QSR industry continued to be muted with consumers seeking more value for money deals and curbing their discretionary spends," Westlife Development’s vice chairman Amit Jatia had said while declaring the numbers.

To counter the slowdown in discretionary spending, fast-food restaurants have stepped up value meals and price discounting, in addition to launching multiple menu options at price points under Rs 40.

Meanwhile, Indian restaurant chains seem to be faring better. "While consumers may eat a burger or pizza once a week, Indians are still not accustomed to having fast-food on their menu every day. They still crave for Indian cuisine on other days," said Kamal Agarwal, director at Haldiram, adding that the chain’s sales growth has come down from mid-teens to high single digit but has not declined yet. This is despite higher price-tags for Indian food products in contrast to western style foods firms which have been pushing value meals.

"The trend seems to be that consumers prefer Indian food since it’s fresh…unlike western foods which are processed," said Murali Parna, CEO of Sagar Ratna Restaurants that operates 92 stores across the country. "We have not reduced prices for the past six months. Our entry level price isRs 55. We took a 2.3% price hike in February this year," he said.